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Vladimir Putin goes to Japan

In a sign of rapidly improving relations, Japan defies US wish to extend a warm welcome to Vladimir Putin.

Alexander Mercouris

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A common trope of Western commentary is that since the unification of Crimea with Russia (an event which the West insists on calling an “annexation”) Russia and its leader President Putin have become international pariahs, and are globally isolated.

The reality is that to an extent that the Western and especially the West European public do not know, hostility to Russia is almost entirely confined to certain core nations of the Western alliance with European populations: the US, certain though by no means all European states, Canada, Australia and New Zealand.  Outside this small ring of states attitudes to Russia and to Vladimir Putin in particular are very different.  Not only are they becoming globally increasingly influential, but key US allies such as Saudi Arabia, Turkey and Japan are actively courting them.

A good example of this is President Putin’s recent two day visit to Japan.

As even a very hostile account of the visit in The Diplomat is forced to admit, the Japanese went out of their way to shower Putin with hospitality

The Japanese prime minister, Shinzo Abe, went out of his way to make this visit “special” for his Russian guest by arranging for the first day to be spent in his home town, Nagato, in the southern prefecture Yamaguchi of the main island Honshu – a place, famous for its exquisite sake, hot springs, and delicious food. The carefully planned schedule, with a pronounced demonstration of a personal hospitality touch from Abe, listed “relaxing” time in the famous hot springs, and a feast with exotic traditional local food, including exquisite dishes of raw and cooked fugu.

The Diplomat nonetheless deems the visit a ‘failure’ because it did not result in a peace treaty between Japan and Russia, because Russia did not agree to hand over two islands of the Kuril archipelago to Japan, and because of the (relative) absence of commercial and trade agreements between the two countries.

In reality it beggars belief that intractable issues like the Kuril Island dispute, or the question of the peace treaty, which have set Japan and Russia at odds with each other since the 1950s, could be resolved over the course of a single visit lasting just two days.  The Russians before Putin’s visit made it clear that would not happen, and the Japanese cannot ever have imagined that it would.

The point of the visit is that Japan, which throughout the Cold War and for two decades after made no attempt to engage with Russia, is now actively and purposefully doing so.  The invitation to Putin to visit Japan was extended in defiance of US wishes, and the Japanese leadership both during the visit and at the previous east Asian summit in Vladivostok has made clear its determination to turn the page on a century of hostility between Japan and Russia extending all the way back to the 1904-1906 Russo-Japanese War.

I discussed the reasons why Japan might now be intent of forging closer relations with Russia in an article I wrote immediately following the Vladivostok summit

…….there are the obvious economic benefits, with Russia possibly becoming an important future provider of energy and raw materials to these countries, and a possible market for their goods.  Looking further ahead, with its highly educated and well-disciplined workforce, its considerable industrial base, its traditionally very strong scientific base, and its very low and very competitive cost structure, Russia is an obvious partner in future industrial projects.

Behind all the enthusiastic talk from [Japanese Prime Minister] Abe [there is also] the overwhelming reality of the rapid growth of Chinese power.  With both Japan and South Korea having fraught relations with China, it makes sense for both countries to develop good relations with China’s great ally Russia in order to obtain through Russia some influence and capacity to restrain Beijing. 

This is now becoming the increasing pattern across the whole Asia-Pacific region, with Russia seeking and accepting offers of good relations from an increasing number of countries falling under China’s shadow: India, Vietnam, South Korea and Japan.

The Russians for their part have shown great skill leveraging the advantage their undeclared alliance with China gives them to improve relations with these countries, including countries like South Korea and Japan that have never previously been their friends.

As for the Chinese, it is equally in their interest that a country close to them – Russia – should develop relations with countries that might otherwise all too easily simply become their enemies.

As for the failure to achieve a ‘breakthrough’ in the Kuril Islands dispute, or to sign a peace treaty, of which so much is made in the article in The Diplomat, I discussed this too in my previous article

Russia has made it repeatedly clear that it is not prepared to return the islands to Japan in return for a Peace Treaty.  In an interview with Bloomberg given shortly before the meeting with Abe Putin again made that clear

We do not trade territories although concluding a peace treaty with Japan is certainly a key issue and we would like to find a solution to this problem together with our Japanese friends.”

(Bold italics added)

Putin undoubtedly knows that returning the islands to Japan is unacceptable to Russian public opinion.  In 1992 Russia’s then President Yeltsin was forced to call off at the last moment a planned trip to Japan because of public outrage and fears that just a year after the USSR broke up he was preparing to hand the islands over to Japan.  There is no evidence Russian popular feeling on this issue has moderated since then.  In addition the islands are strategically important to Russia since they guard entry points to the Sea of Okhotsk, an assembly and patrol area of Russian strategic nuclear submarines that form part of Russia’s Pacific Fleet.

By contrast both Putin and Abe know that despite noisy demands for the islands from Japanese nationalists, Japanese public opinion has long since written off the islands and is no long much exercised by this issue.

Whilst it is unlikely that Abe will drop the demand for the islands, and he must know that Putin is not going to give them up, his floating of the idea of the Peace Treaty, and the negotiations to achieve it which he has now restarted, is probably his way of putting the islands issue to one side as he and Japan forge closer ties with Russia.

(bold italics added)

In other words, the ‘breakthrough’ is not in the intractable but ultimately less important questions of the Kuril Islands and the peace treaty.  It is in the general state of Russian-Japanese relations.

If the Putin-Abe summits in Vladivostok and in Japan shows that ties between Japan and Russia are forging ahead, they also once again demonstrate something else, which I discussed directly after the G20 summit in Hangzhou.  This is that so far from being isolated Russia, though the weakest of the three Great Powers, has over the last decade replaced the US as the diplomatic centre of the international system.  It is to the Russians, not the US – and not yet to China – that everyone wants to talk.

Just as the Russians are increasingly making the diplomatic weather in the Middle East – with the tripartite discussions between Russia, Turkey and Iran to negotiate a peace settlement of the Syrian conflict being just one example of this – so they are increasingly making the diplomatic weather in the eastern Pacific.

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It’s Official: ‘Britain’s Democracy Now At Risk’

It’s not just campaigners saying it any more: democracy is officially at risk, according to parliament’s own digital, culture, media and sport committee.

The Duran

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Via True Publica, authored by Jessica Garland – Electoral Reform Society:


Britain’s main campaign rules were drawn up in the late 1990s, before social media and online campaigning really existed. This has left the door wide open to disinformation, dodgy donations and foreign interference in elections.

There is a real need to close the loopholes when it comes to the online Wild West.

Yet in this year’s elections, it was legitimate voters who were asked to identify themselves, not those funnelling millions into political campaigns through trusts, or those spreading fake news.

The government trialled mandatory voter ID in five council areas in May. In these five pilot areas alone about 350 people were turned away from polling stations for not having their papers with them — and they didn’t return. In other words, they were denied their vote.

Yet last year, out of more than 45 million votes cast across the country, there were just 28 allegations of personation (pretending to be someone else at the polling station), the type of fraud voter ID is meant to tackle.

Despite the loss of 350 votes, the pilots were branded a success by the government. Yet the 28 allegations of fraud (and just one conviction) are considered such a dire threat that the government is willing to risk disenfranchising many more legitimate voters to try to address it. The numbers simply don’t add up.

Indeed, the fact-checking website FullFact noted that in the Gosport pilot, 0.4 per cent of voters did not vote because of ID issues. That’s a greater percentage than the winning margin in at least 14 constituencies in the last election. Putting up barriers to democratic engagement can have a big impact. In fact, it can swing an election.

In the run-up to the pilots, the Electoral Reform Society and other campaigners warned that the policy risked disenfranchising the most marginalised groups in society.

The Windrush scandal highlights exactly the sort of problems that introducing stricter forms of identity could cause: millions of people lack the required documentation. It’s one of the reasons why organisations such as the Runnymede Trust are concerned about these plans.

The Electoral Commission has now published a report on the ID trials, which concludes that “there is not yet enough evidence to fully address concerns” on this front.

The small number of pilots, and a lack of diversity, meant that sample sizes were too small to conclude anything about how the scheme would affect various demographic groups. Nor can the pilots tell us about the likely impact of voter ID in a general election, where the strain on polling staff would be far greater and a much broader cross-section of electors turns out to vote.

The Electoral Reform Society, alongside 22 organisations, campaigners and academics, has now called on the constitution minister to halt moves to impose this policy. The signatories span a huge cross-section of society, including representatives of groups that could be disproportionately impacted by voter ID, from Age UK to Liberty and from the British Youth Council to the Salvation Army and the LGBT Foundation.

Voters know what our democratic priorities should be: ensuring that elections are free from the influence of big donors. Having a secure electoral register. Providing balanced media coverage. Transparency online.

We may be little wiser as a result of the government’s voter ID trials. Yet we do know where the real dangers lie in our politics.

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Corrupt Robert Mueller’s despicable Paul Manafort trial nears end (Video)

The Duran – News in Review – Episode 79.

Alex Christoforou

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Paul Manafort’s legal team rested its case on Tuesday without calling a single witness. This sets the stage for closing arguments before the judge hands the case to jurors for a verdict.

Manafort’s defense opted to call no witnesses, choosing instead to rely on the team’s cross-examination of government witnesses including a very devious Rick Gates, Manafort’s longtime deputy, and several accountants, bookkeepers and bankers who had financial dealings with Manafort.

Closing arguments are expected on Wednesday. Jurors may begin deliberating shortly after receiving their final instructions from judge Ellis.

Manafort case has nothing to do with Mueller’s ‘Trump-Russia collusion witch-hunt’ as the former DC lobbyist is accused of defrauding banks to secure loans and hiding overseas bank accounts and income from U.S. tax authorities.

U.S. District Judge T.S. Ellis III denied a defense motion to acquit Manafort on the charges because prosecutors hadn’t proved their case.

The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris discuss the circus trial of Trump’s former Campaign Manager Paul Manafort, and how crooked cop Robert Mueller is using all his power to lean on Manafort, so as to conjure up something illegal against US President Donald Trump.

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Via Zerohedge

Prosecutors allege he dodged taxes on millions of dollars made from his work for a Ukrainian political party, then lied to obtain bank loans when cash stopped flowing from the project.

The courtroom was sealed for around two hours Tuesday morning for an unknown reason, reopening around 11:30 a.m. with Manafort arriving around 10 minutes later.

The decision to rest their case without calling any witnesses follows a denial by Judge T.S. Ellis III to acquit Manafort after his lawyers tried to argue that the special counsel had failed to prove its case at the federal trial.

The court session began at approximately 11:45 a.m.:

“Good afternoon,” began defense attorney Richard Westling, who corrected himself and said, “Good morning.”

“I’m as surprised as you are,” Judge Ellis responded.

Ellis then heard brief argument from both sides on the defense’s motion for acquittal, focusing primarily on four counts related to Federal Savings Bank.

Federal Savings Bank was aware of the status of Paul Manafort’s finances,” Westling argued. “They came to the loans with an intent of doing business with Mr. Manafort.”

Prosecutor Uzo Asonye fired back, saying that that even if bank chairman Steve Calk overlooked Manafort’s financial woes, it would still be a crime to submit fraudulent documents to obtain the loans.

“Steve Calk is not the bank,” Asonye argued, adding that while Caulk may have “had a different motive” — a job with the Trump administration — “I’m not really sure there’s evidence he knew the documents were false.”

Ellis sided with prosecutors.

The defense makes a significant argument about materiality, but in the end, I think materiality is an issue for the jury,” he said, adding. “That is true for all the other counts… those are all jury issues.”

Once that exchange was over, Manafort’s team was afforded the opportunity to present their case, to which lead attorney Kevin Downing replied “The defense rests.

Ellis then began to question Manafort to ensure he was aware of the ramifications of that decision, to which the former Trump aide confirmed that he did not wish to take the witness stand.

Manafort, in a dark suit and white shirt, stood at the lectern from which his attorneys have questioned witnesses, staring up at the judge. Ellis told Manafort he had a right to testify, though if he chose not to, the judge would tell jurors to draw no inference from that. – WaPo

Ellis asked Manafort four questions – his amplified voice booming through the courtroom:

Had Manafort discussed the decision with his attorney?

“I have, your honor,” Manafort responded, his voice clear.

Was he satisfied with their advice?

“I am, your honor,” Manafort replied.

Had he decided whether he would testify?

“I have decided,” Manafort said.

“Do you wish to testify?” Ellis finally asked.

“No, sir,” Manafort responded.

And with that, Manafort returned to his seat.

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One more step toward COMPLETE de-dollarization

Over the past several months, sitting here in Moscow, it has become increasingly obvious that while the US Dollar is unquestionably the world’s leading and liquid reserve currency, it comes with an ever increasing high price (of sovereignty and FX) if you are not the USA.

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I have opined and written about the trend towards de-dollarization before, but with the latest US –Turkish spat it has hit the wallets, mattresses and markets of a number of countries, be they aligned with Washington or not. One thing they all have in common was that in this recent era of low cost available money, many happily fed at the US dollar trough.

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This serves as a further albeit loud example to many nations for the need to diversify to an extent away from the greenback, or risk being caught up in its volatile, sudden and unpredictably risky increasingly politicized directions.

The Dollar and the geopolitical winds from Washington are today as never before openly being used as policy, which can be called the “carrot and stick”, a distinctly Pavlovian approach. Sadly, few if any can make out where or what the carrot is in this recent US worldview branding.

Tariffs, sanctions, pressured exchange rates, the Federal Reserve loosening or tightening, trade agreements and laws ignored or simply trashed… there is a lot going on which seems to democratically affect America’s allies as well as those on Washington’s politically popular and dramatic “poo-poo” list.

Just now from a press conference in Turkey, I watched Russia’s foreign minister Lavrov say that through the actions shown by the US, the role of the US dollar as a secure global reserve currency for free trade will diminish as more countries switch to national currencies for international trade.

He clearly spoke for many nations when he said; “It will make more and more countries that are not even affected by US sanctions go away from the dollar and rely on more reliable, contractual partners in terms of currency use.” Putting the situation in a nutshell he went on to say “I have already said this about sanctions: they are illegal, they undermine all principles of global trade and principles approved by UN decisions, under which unilateral measures of economic duress are unlawful.”

Turkey, a long-standing NATO ally and a key line of western defense during the long cold war years fully agreed with his Russian counterpart. The Turkish foreign minister Mr. Cavosoglu openly warned that US sanctions or trade embargoes can and are being unilaterally imposed against any country at any time if they do not toe DC’s political line.

He said at the same press conference; “Today, sanctions are imposed on Turkey, and tomorrow they can be used against any other European state. If the United States wants to maintain respect in the international arena, then it is necessary for it to be respectful of the interests of other countries.”

What is happening in Turkey is symptomatic of the developed and emerging markets globally. When trillions of dollars of newly issued lucre was up for grabs, thanks to several developed country central banks, it was comparatively easy for governments and companies just like Turkey’s to borrow funds denominated in dollars and not their national currencies.

Turkey has relied on foreign-currency debt more than most EM’s. Corporate, financial and other debt denominated mostly in dollars, approximates close to 70% of it’s economy. Therefore as the Turkish lira plunges, it is very costly for those companies to repay their dollar-denominated loans, and even now it is patently clear many will not.

The concern rattling around the underbelly of the global markets is what can be reasonably expected for assets and economies that were inflated by cheap debt, the United States included. All this points not so much to a banking crisis as has happened eight years ago, but a systemic financial market crisis.

This is a new one, and I doubt if any QE, QT, NIRPs, or ZIRPs will make much of a difference, despite the rocket-high equity markets the US has been displaying.

One financial trader I spoke to, whom I have known since the early 1980’s (and I thought him ancient then) muttered to me “we’re gettin’ into the ecstasy stage, nothing but the high matters, everything else including the VIX is seen as boring denial, and not the warning tool it is. Better start loading up on gold.”

Meanwhile, de-dollarization is ongoing in Russia and is carefully studied by a host of countries, especially as the Russian government has not yet finished selling off US debt; it still has just a few billion to go. The Russian Finance Minister A. Siluanov said this past Sunday that Russia would continue decreasing holdings of Treasuries in response to sanctions.

The finance minister went on to say that, Russia is also considering distancing itself from using the US dollar for international trade, calling it an unreliable, conditional and hence risky tool for payments.

Between March and May this year, Russia’s US debt holdings were sold down by $81 billion, which is 84% of its total US debt holdings, and while I don’t know the current figure it is certain to be even less.

The latest round of tightening sanctions screws against Russia were imposed by the State Department under a chemical and biological warfare law and should be going into effect on August 22. This in spite of the fact that no proof was ever shown, not under any established national or international law, or with any of several global biochemical conventions, not even in the ever entertaining court of public opinion.

Whatever Russia may continue to do in its relationship with US debt or the dollar, the fact of the matter is that Russia is not a heavyweight in this particular financial arena, and the direct effects of Russia’s responses are negligible. However, the indirect effects are huge as they reflect what many countries (allied or unallied with the US) see as Washington’s overbearing and more than slightly unipolar trade and geopolitical advantage quests, be they Mexico, Canada, the EU, or anyone else on any hemisphere of this globe.

Some of the potential indirect effects over time may be a similar sell-off or even gradual reduction of US debt exposure from China or any one of several dozens of countries deciding to reduce their exposure to US debt by reducing their purchases and waiting for existing Treasuries to mature. In either case, the trend is there and is not going away anytime soon.

When Russia clears its books of US dollarized debt, then who will be next in actively diversifying their US debt risk? Then what might be the fate of the US Dollar, and what value then will be the international infusions to finance America’s continually growing debt, or fuel the funds needed for further market growth? Value and the energy of money has no politics, it ultimately trends towards areas where there is a secure business dynamic. That being said, looks like we are now and will be living through the most interesting of disruptive times.

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